Download - Trends in Cross-Border Funding
Cross-Border Funding of Microfinance
Global trends 2007-2010
December 2011
Outline
What is cross-border funding?
Global trends in cross-border funding
Annexes
About the data
Funders surveyed in 2011
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What is cross-border funding?
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Local Funding
Public Donors and
Investors(Multilaterals,
Bilaterals, DFIs)
Private Donors and
Investors (Foundations,
Institutional and Retail Investors)
Microfinance(Support for microfinance at all levels of the financial system: retail, market infrastructure, and policy)
Microfinance Investment
Intermediaries (MIIs)
Government funds
(State banks, Apexes,
Independent programs)
Local commercial
sources(Commercial
banks
Deposits (Individual,
Institutional)
Cross-border Funding
Private investors)
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Commitments still growing, but at slower pace
0
5
10
15
20
25
Dec07 Dec08 Dec09 Dec10
Cross-border commitments to microfinance - US$ million
Total (estimate)
20 funders in our sample
+17%
Annual growth rates:
+13%
+17% Total (estimate)
+17% 20 funders
+30%+12%
+22%
+7%
Cross-border commitments to microfinance (US$ billion)
• Commitments increased continuously to reach at least $24 billion by Dec. 2010.
• Growth rates are diminishing, from around 30% in 2008 to 13% in 2010.
• Around $3 billion was disbursed in 2010. 4
New commitments higher in 2010 than in previous years
9,952
12,192
13,683 14,689
2007 2008 2009 2010
Commitments over 4 years - US$ million 20 funders in our sample
Total commitments
Growth
+2,757-518
+2,924-1,433
+3,613-2,607
New commitments
Closed projects
+2,239
+1,006+1,491
• The decline in the growth rate is due to a higher number of microfinance projects coming to an end in 2010 compared to previous years, rather than a slowdown in new commitments.
• The amount of new commitments was higher in 2010 than in the years 2007 to 2009. 5
Public funders provide 70% of cross-border commitments
Public funders
70%
Private funders
30%
Commitments by Type of Funder (%)Estimate - Dec. 2010
Total commitments: US$ 24 billion
• No significant difference in the growth of private and public funding from 2009 to 2010. From 2008 to 2009, private funding grew at a much higher rate (33%) than public funding (11%).
• CGAP estimates that public funders provide around 70% of total commitments to microfinance and private funders around 30%.
Commitments by type of funder (%, estimate as of Dec. 2010)
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Largest 5 funders remained the same over last 3 years
Dec. 2010 TypeFunder's commitments in % of
the commitments of the 20 funders in our sample
KfW DFI 18%World Bank Multilateral Agency 11%AsDB Multilateral Agency 11%IFC DFI 9%EBRD DFI 7%All 5 57%
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Funders use diverse channels to support microfinance
20 largest funders
Microfinance(Support for retail institutions, market inf rastructure and policy)
Direct Governments Local apexes and banks
MIVs and holdings
38% 28% 8%18%
Funding channels (% of commitments of 20 largest funders)
Unspecified indirect funding
8%
• In 2010, the 20 largest funders channeled 18% of their funding via MIVs and holdings (up from 13% in 2008).
• Direct funding represented 38% of the 20 largest funders’ commitments in 2010.
• Overall, almost half of total cross-border funding is channeled via MIVs, holdings, local apexes, banks and other intermediaries. 8
Debt is most used instrument; equity and guarantees increasing
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• Debt remains the main financial instrument, but its share is declining.
• Equity investments increased by 12%, compared to 57% in 2009. Guarantees increased by 93%, mostly driven by four large new programs. Grants commitments decreased for the first time in 2010 (-9%), mostly due to projects coming to an end in 2010 and a relative slowdown in new commitments.
• Around 14% of the direct debt is provided in local currency. 9
68%
9%13%
5% 5%
64%
12% 13%6% 5%
60%
13% 11% 10% 6%
Debt Equity Grant Guarantee Other
Dec08Dec09Dec10
+6%
+20% -9%
+12% +12% +57%
+1%
+19% +13%
+93%
+20% Annual growth rates
Total commitments by instrument (data from 20 largest funders)
Funding for capacity building remains stable
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Capacity building
14%
On-lending86%
The purpose of funding - % of total commitments20 funders in our sample - Dec. 2010*
* Missing breakdown for AsDB
10%
2%
2%
Capacity building at the policy level
Capacity building at the market infrastructure levelRetail capacity building
On-lending
• For the 20 funders in our sample, the bulk of cross-border funding (86%) is used for on-lending to retail clients.
• The share of commitments dedicated to capacity building (14%) remained stable over the last four years.
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No change in regional allocation of funding over the last four years
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Dec07 Dec08 Dec09 Dec10
Commitments by Region (%)20 funders in our sample
Multi-Region
Sub-Saharan Africa (SSA)
South Asia (SA)
Middle East & North Africa (MENA)
Latin America & the Caribbean (LAC)
Eastern Europe & Central Asia (ECA)
East Asia & the Pacific (EAP)
15%
9%
21%
16%
4%
24%
11%
• SA, ECA and LAC remain the regions receiving most funding.
• Commitments to ECA have decreased for the first time in four years in US$ terms.
• Commitments to SSA represent 11% and increased steadily albeit at slower growth rates than commitments globally. 5 funders surveyed expect to offer more funding to SSA in 2011.
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Commitments by region (%, data from 20 largest funders)
Regional Breakdown
Annual growth rates
Cross-border commitments to microfinance – US$ billion
1.3 1.5 1.7 1.7
Sub-Saharan Africa (SSA)
Dec07 Dec08 Dec09 Dec10
+10%+14% +2%
2.8
3.3 3.1
3.5
South Asia (SA)
Dec07 Dec08 Dec09 Dec10
+17%-6%
+12%
.6 .6 .6 .6
Dec07 Dec08 Dec09 Dec10
-12% -3% +5%
Middle East & North Africa (MENA)
1.4
1.9 2.0 2.3
Latin America & Caribbean (LAC)
Dec07 Dec08 Dec09 Dec10Dec07 Dec08 Dec09 Dec10
+34%+8%
+12%
2.2
2.9
3.3 3.1
Eastern Europe & Central Asia (ECA)
Dec07 Dec08 Dec09 Dec10
+31%
+15%-6%
.7 .8 .9 1.3
East Asia & the Pacific (EAP)
Dec07 Dec08 Dec09 Dec10
+10% +10%
+49%.8
1.3
2.2 2.3
Multi-Region
Dec07 Dec08 Dec09 Dec10
+59%
+65% +5%
Data for the 20 funders in our sample
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Looking ahead: Issues funders focus on in next five years
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0 1 2 3 4 5 6 7 8 9 10
Payment services and remittances
G2P and social safety nets
Reaching specific client groups
Microinsurance
Transparency on financial and social performance
New business models
MFI governance
Savings
Regulation and supervision
Mobile and branchless banking
Responsible finance and consumer protection
Rural finance
Issues funders will focus on in the next 5 years
• Responsible finance is key focus area for funders.
• Funders go beyond credit-only model and support outreach to still underserved markets (e.g. rural areas).
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Number of responses
ANNEXES
About the data
How representative are the data?
What are the main indicators?
What is the CGAP funder
survey?
The CGAP funder survey collects data from the major cross-border funders of microfinance. The full version of the CGAP survey, conducted every two years, captures data from over 60 funders. In 2011, CGAP surveyed a subset of 20 microfinance funders.
The 20 funders surveyed in 2011 represented 85% of commitments reported in the previous survey year and around 65% of total cross-border funding to microfinance.
Commitments: All funds set aside for microfinance, whether or not disbursed stock of funding at a given moment (December 2010). Disbursements: All funds disbursed in the survey year flow of funds in 2010.
What data is used in this
presentation?
This presentation is based on four years of data from the CGAP microfinance funder survey, complemented with data from Symbiotics’ MIV survey.
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Funders surveyed in 2011
Public funders
Development Finance Institutions (DFIs)
AECID, AFD Proparco, DCA USAID, EBRD, EIB, FMO, IFC, KfW, MIF IADB, OPIC
Multilateral and UN agencies AfDB , AsDB, EC, IFAD, World Bank
Bilateral agencies CIDA, DFID, GIZ
Private funders
Foundations Bill & Melinda Gates Foundation
Institutional Investors ABP
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Further resources
Additional data and analyses are available at
www.cgap.org/funders
For questions and feedback please contact Barbara Gähwiler ([email protected]).
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Advancing financial access for the world’s poor
www.cgap.org
www.microfinancegateway.org
